In 2002, President Bush Imposed 30% Steel Tariffs; This Is What Happened Next

In an eerie analogue of what is about to take place, on March 5, 2002 President George W. Bush imposed tariffs as high as 30% on global steel imports.

The temporary tariffs of 8–30% were originally scheduled to remain in effect until 2005. They were imposed to give U.S. steel makers protection from what a U.S. probe determined was a detrimental surge in steel imports, as more than 30 steel makers had recently declared bankruptcy. Canada and Mexico were exempt from the tariffs because of penalties the United States would face under NAFTA. Additionally, some developing countries such as Argentina, Thailand, and Turkey were also exempt.

The response was immediate.

Domestically, some of the president’s political opponents, such as Democratic House Representative Dick Gephardt, criticized the plan for not going far enough. For some of the president’s conservative allies, imposing the tariff was a step away from Bush’s commitment to free trade. Critics also contended that the tariffs would harm consumers and U.S. businesses that relied on steel imports, and would cut more jobs than it would save in the steel industry.

The international response – like now – was more vocal.

Immediately after the announcement, the European Union announced that it would impose retaliatory tariffs on the United States, risking the start of a major trade war. To decide whether or not the steel tariffs were fair, a case was filed at the Dispute Settlement Body of the World Trade Organization (WTO). Japan, Korea, China, Taiwan, Switzerland, Brazil and others joined with similar cases.

In a decisive decision, on November 11, 2003, the WTO came out against the steel tariffs, saying that they had not been imposed during a period of import surge—steel imports had actually dropped a bit during 2001 and 2002—and that the tariffs therefore were a violation of America’s WTO tariff-rate commitments.The ruling authorized more than $2 billion in sanctions, the largest penalty ever imposed by the WTO against a member state, if the United States did not quickly remove the tariffs.

In retaliation, the European Union threatened to counter with tariffs of its own on products ranging from Florida oranges to cars produced in Michigan, with each tariff calculated to likewise hurt the President in a key marginal state.

But it was the market’s response that broke the camel’s back: what followed immediately after the tariffs were announced was a 30% plunge in the S&P 500, a slump in the dollar and a rally in bonds that slashed 10Y yields in half.

After receiving the verdict, both from the market and the WTO, the United States backed down and withdrew the tariffs on December 4, 2003.

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Stuart, if we had economic free trade (everywhere) and we practiced honest capitalism, I would agree. However, the crony-capitalism & other favoritism practiced by Obama and his predecessors have placed us in the current predicament. Other nations have taken advantage of the USA for decades and we need to protect essential national security industries. Don’t misunderstand me, I don’t believe in the imperialism practiced in the last century.

” Other nations have taken advantage of the USA for decades and we need to protect essential national security industries.”

Cranerigger is correct. It’s funny how we always hear about huge trade deficits from any country we do business with. We never hear about a trade surplus. Other countries have been siphoning wealth from this country for decades and we’ve let them. Times are changing.

I’m not trying to be a jerk or get into an argument.
I respect your opinion, but disagree with it.

Keynesian/globalist economics that most all colleges indoctrinate us with – they do indeed say that tariffs are stupid because they don’t want nationalism & they most certainly don’t want a strong, independent U.S.

I benefited from some of my college courses. Others, Thank God, I was able to be deprogrammed out of thanks to folks like Alan Watt, Alex Jones, Bill Cooper…

A lot of college is about indoctrination. Memorizing what they tell us to be true & reading it back to them.
Fall into line into their system. Wear the mortarboard hat with the limp tassle hanging down – ‘another brick in the wall’. Lots & lots of symbolism in all those things that goes way, way back into time.

And many people will never question “their” education because they paid for it. It’s a big step to admit that – to some degree – you were conned.

That’s why I failed economics in college. After the first couple of chapters in the Samuelson book, the course devolved into BS that didn’t make any sense because it wasn’t the way the world worked. I couldn’t lie and give the answers they wanted on the tests.

2 Million people without power in the NE New England States as they got hammered with a Noreaster storm. Flooding and freezing temps. Got Solar off the Grid? How about a backup heating system? Propane or woodstove? Freezing in the dark sucks!! And why I live in FL.

I suppose we are to ignore the first 100 years of our country? Tariffs for revenue are fine and hardly stupid. What’s really stupid is taxing income, since when something is taxed, you get less of it.

Protective tariffs impoverish the people, but when governments give welfare to corporations followed by dumping on other countries where there’s no (or less) govt corp welfare, then there’s quite a problem. Maybe you’d see it more clearly if you look at how African farmers are crippled by “food aid.”

The economically illiterate like our founding fathers who wrote them into the Constitution?

The country did a lot better economically before it started paying attention to “economists” who always seem know better no matter what their track record of failure or accomplishment. At least they think they do.

They ‘ruled’ that the tariffs occurred after the import surge & that put us in the wrong. The steel companies didn’t declare bankruptcy until they absolutely had to & it was after years (plural) of huge, huge dumping of steel here from offshore.

Now, like then, article after article only mentions what tariffs or restrictions the U.S. wants to put on steel coming in. Never a peep about the tariffs & restrictions our steel faces when we try to export to other countries. They always seem to imply by omission that other countries don’t tax or restrict our steel – which they most certainly do.

MAGA, MAGA, MAGA. We need the productive capacity to make our own iron, steel, & aluminum. It’s a national defense issue.

IH, FTW – all here should listen to you 2. The WTO works actively to reduce the US to sh*thole nation status. Anything they support we should fight against. Screw the economies of other nations if it hurts our own. We need our own independent manufacturing, mining, technological base. Let the world follow our lead or fail. I’m sick and tired of giving consideration to all those nations who want to level the playing field. I’m for winning the game. Anything goes as far as I’m concerned to ensure my country comes out on top.

I Agree Heartless, The WTO has stacked the deck against the USA for a long, long time. China undercuts us using slave labor. They have no concern for the environment or worker safety. Ditto with India. They use high sulfur coal to power their industries as well. The reason it didn’t work under Bush was that it was temporary. Who would build heavy industry infrastructure knowing it was temporary? Nobody. Trump has reigned in the EPA and, though not as cheap as high sulfur coal, energy is cheaper, too.
America can be great again if the snowflakes and soy boys are willing to get dirty, sweat and man up.

I hope Pres. DT doesn’t back down. The reason European and Asian trading blocs were so vocal and threatened to retaliate back in 2002 was because they knew the US would back off. They are not very vocal now, they know this President likely won’t.
Previous administrations gave away the store, literally guaranteeing permanent trade surpluses for them and permanent deficits for us in the trade agreements. All the talk from politicians was only to make the working people think they were representing our interests and working on our behalf – bullsh*t. Now we see inconceivable trade deficits undermining the prosperity of the US (the politicians promised that would never happen). The American production and manufacturing base has diminished to a point it can only provide a fraction of the goods consumed, even components of several major weapon systems for the DoD are manufactured by foreign countries. Not only that, once we were the largest creditor nation in the world, in less than two generations are now the largest debtor nation in the history of the world. Why was this allowed? Never forget things are the way they are because powerful persons or entities benefit from it. Whatever a deal is done it’s not for the working people, it’s for the benefit of a small group of “investors” who are vastly enriched.
When the MSM announces (as per directed by gov’t) each month that hundreds of thousands of jobs are being created that’s good news, the bad news they are almost entirely low paying or part-time jobs with little to no benefits. How can a country build and maintain a large middle class on low-paying or part-times jobs? I’ll hope for the best but expect the worst.

I once read that students in other countries are taught economics from grade school up. In dumbed down education USA, most of us are economic illiterates. Economics is offered in colleges. I suppose some better high schools offer a class, but doubt there is any requirement for graduation.

Tariffs are just another tax the American people will pay. The manufacturer of goods is not going to eat this cost, but will pass it on to the consumer. No different than taxing Mexican goods to pay for the wall. The American people will pay for it no matter what, and in the long run jobs will be lost due to retaliatory tariffa.

You don’t want people like the Chinese to undercut us on prices of goods in our own country, for several reasons. One is that the Chinese have different standards from our own, and the quality of their work is, in the minds of many, deficient compared to ours. This is politically incorrect but true in reality. Another reason is that you want your fellow countrymen to have a good standard of living, which you can’t have if all you are doing is undercutting other people. We need to focus on making good quality products, regardless of cost. The Chinese can’t do this, and neither can India or Pakistan. To do this requires time, and these other nationalities sacrifice time in order increase profit. We know better than to do that. Instead, we are willing to pay for good quality, and they are not.

the tariff can be an appropriate counter measure to a state like china that debases its currency and enslaves its people. if the US was a state in good standing with any sort of “free fair trade” then I would say it is necessary to tariff chinese steel to make the cost of the chinese steel an apples to apples comparison to american steel.
If China and the us were both free fair trade states, no tariff would be required.
the tariff tax, however, can not be used or applied in this capacity because neither state has the moral high ground. We are just on different levels of depravity and corruption at this point. I do, however, hold out that Trump is more in our favor then not, and I trust that his use of the tariff is in our favor, not otherwise. we will have to wait and see if it works out though, because it is like playing with fire. it could be what has to be done, for some other reason, like countering a Fed move to destroy the economy, but who knows what is going to happen when you are juggling bowling pins on fire over a puddle of gasoline. we do live in interesting times.

People don’t want to accept the fact that we must pay more for goods that are produced here in the US if we really want Bob or Fred or John down the road to have a good normal job. If not, we just keep buying from Harbor Freight and many other big box store cheaper made goods that support Ching Li or Yeng Tso in China that make $1.00/hr. We can’t have it both ways. We have to man up and take some hard lumps if we truly want our country to ever get better.

There in lies the problem my friend. Americans not only don’t understand the value of sacrifice today for a better tomorrow,they we are incapable of understanding it. Our instant gratification syndrome is irreversible. I’m speaking to the whole not the individual. Some of us still have the stones for it. On a side note anyone still believing in the Jesuit billionaire in cheif is out to MAGA is delusional. That’s not directed at you just a general statement for the masses.

There in lies the problem my friend. Americans not only don’t understand the value of sacrifice today for a better tomorrow,they we are incapable of understanding it. Our instant gratification syndrome is irreversible. I’m speaking to the whole not the individual. Some of us still have the stones for it. On a side note anyone still believing in the Jesuit billionaire in cheif is out to MAGA is delusional. That’s not directed at you just a general statement for the masses.

BUllshit
If labor was free in the US they still couldn’t compete …
Why is that?
How can Chiners manufacture a product and ship it half way around the world for less than the cost of materials in the US ?
Get Real

There are different ways of looking at this. Before 1913, the same time the Fed Reserve came in, there was no income tax at all on US citizens. The main source of income for the USA was duties on imported goods. We flourished under this system to the point that the liberals of the time had to do something to undercut the many rich and robber barons. Even far right wing conservative me does not think that the robber barons should not pay a bit for their good fortune, but not the just plain rich or average man. In 1913 the very first income tax was just for the rich. Average Joe still paid nothing. It only got out of hand in WW2 to pay for the war and would cease (they promised) after the war,,, but then we all know how that ceasing went. If implemented correctly along with tax reductions of which we have just seen some (but not enough) decrease, tariffs with major tax reductions could help get us going again. One reason is that all have to pay it through purchasing goods , the welfare class does not get off free. But to work, once again , we need major tax concessions. KF

In general I’m against tariffs.
It warps the market and makes it
inefficient.
When you have an industry that is
deemed to be in the national interests,
then subsidize it, recognizing that you then
make it political and consequently
inefficient, and much more expensive.
The fact that Korea and China can produce
steel cheaper than we can is due to politics,
not because we have more expensive workers,
it is because we did not adapt and improve
our systems.
Democrats are Americas problem and
our downfall.
BTW my grandfather was retired US steel worker,
Detroit.

Can you imagine the impact those tarrifs will have on the various huge state infrastructure projects? rail, CONRAC at kahului,,, tons upon tons of rebar and structural steel, cost overruns will be huge.

Nail,
You and I are only ~50 miles away from each other,
but we can’t drive to see each other.
We both know Democats will inflate prices
based on this. I have about a ton of #4
rebar I save for barter. I use it for my
projects in the interim, and pickup leftovers as
I come across them.

NailBanger. This is NO reflection on your comment. I only think this is a good place to add to the argument.

One part of the argument would be why pay or rely on the Red Chinese? The increasingly unelected EU bloc.

I see this as a bargaining chip. The dying patient is finally taking some antiparasitic drugs.

we are being bled to death. I don’t think anyone here will argue against that statement. How is that dealt with? ???

A new bargaining chip has just appeared. I know all about the trade wars to world war talk, but as a country, society, and republic, we’re almost dead. Who hasn’t benefited from our previous “trade deals”? The United States. Everyone has reaped our wealth, our jobs , our intellectual property. It has been a plan to destroy from within. Hearts across the world just skipped a beat as they should have.

How can anyone here say they are happy with the debts of today that rob from their children tomorrow? That is a trade deficit and any other deficit spending that occurs with FIAT FEDERAL RESERVE NOTES. Owed back with interest.

The Constitution says that the states shall use gold and silver coins for payment of debts. You can look it up if you doubt it. Keynesian steel be damned.

Constitution you say. What’s that?

Whatever happened to Randolph Scott and …That was when, in the movies, the bad guys carried their six guns in the open and their saddle gun on their horses. White hatters did the same. But not to worry the commies are working hard to confiscate all firearms.

Then won’t be no need for steel for guns or tracks for tanks other than for the commies and they are the rulers, don’t cha know. Pure when commies start shooting.

I hate to throw a monkey wrench into all of your gearboxessss, but the minescule tarrifs that were imposed had very little to do with the problems at that time. Carter and Mondale raised the steel import quota at that time.FROM 9% to 30%.Destroying the steel business in America The FIRST Time.Which caused the tarrifs then. Massive Steel Layoffs!!!!!!! Then Clinton and GORE did the same thing as they were leaving office, RAISING Steel import quota from 10% to 34%. Thus shutting down the steel industry again. The First action both times by the new Republican Presidents was to take action against STUPID DEMOCRAT TRADE policy. by Former Steel Worker BYE!!!!!!!!!!!!!

NAFTA was the nail in the coffin for the middle working class. We were sold out bu Bush and Clinton’s. Tens of Millions of skilled labor jobs went poof gone. Notice how NAFTA does not allow Tariffs. Trump is right. NAFTA needs to be renegotiated. Ross Perrot said it best. The large sucking sound is US Jobs leaving the country. And we got Slick Willie for 8 yrs..

I just have to kid you TharSheBlows. Too good to pass up. When I couldn’t help combining your moniker with the last 2 sentences of your post the devil in my mind spoke. Concerning the vacuum created by NAFTA indeed we got 8 years of Billy’s Willy being blown and all we got as a nation was a soiled off-the-rack dress from the Gap. Most probably made in Cambodia.

Chinese steel is junk pot metal. Full of slag and porosity. Our steel is regulated to be a certain strength and quality. US steel is almost always superior. We have an EPA that mandates our foundries don’t pollute and have to follow literally hundreds of regulations. Costing much more for the final cost of the steel. Our steel companies must pay for healthcare, social security, etc. Etc. China…nothing.
Our steel workers are paid well over minimum wage…most close to top wages. Chinese workers paid under 10 dollar’s. Even the top earners. Most just a few dollars.

Ross parrot said it best…Let’s finally get some of our tigers of industry and corporate lawyers
from our top companies to negotiate our trade agreements instead of our idiot politicians. And Let’s finally start and just give these other countries the exact same deal they give us. No more no less. And let’s quantify all the regulations and pollution they side step and don’t follow or pay and tack that on their steel and products they sell back to us. Do that and we will compete and win.

I don’t see any mention of how the Unions’ greed played a part in many Companies demise. We had Guys back in the 70s. Making $30,000 a Year with Double and Triple overtime. Sweeping the Floor. And Hiding out.

The thing is either USA wages must go down to third world levels. Or third world wages must rise in order for the USA blue collar workers and the manufacturing to have a level playing field. And we know third world wages will not increase as fast a USA wages are falling. So If we are going to increase our production. Tarriffs are the only viable solution. Heck new vehicles cost more today than my farm cost 30 years ago. Those who are importing cheaper goods are not passing on the savings to the USA consumers. Make them pay thru the nose if they wish to sell in the USA markets.

You make sense to me.
If we made all of them, including China, pay “through the nose” we would logically use whatever additional money we made off them go right back to them in order to pay off the debt they hold over our heads. That way they feel no pain. I would not do this in one fell sweep. I’ld pay off the small creditors one at a time this way before dealing with China.

But the Central Bankers and Rulers of most of the planet will not allow us to get out of debt. Debt is how they keep us down. They want us to descend so they can satisfy a sense of superiority, satisfy their hate by getting revenge for our unwillingness to bow to them, and because they want the world economy to be a “level … field” for their growing World (Domination) aka New World Order.

Some way or another, we need to free ourselves from the Central Bank. All our problems go back to this monopoly over our currency. Everything short of that is a bandaid on Cancer.

Ok say with tariffs we pay more for durable goods made here in the USA. 100% of that money would stay in the USA economy. They way it is now only the sales tax and a bit of revenue from shipping and sales commission stays in the USA. Too much of our wealth is permanently being deported to other places because or the buying of crappy imported junk.

Bring on the tariff. I don’t care what the stock market does. There are producers and parasites. The steel mills are producers. The stock market has no tangible product. I am going to side with a Producing Maker every time. I am against all parasite takers. Because too many takers and too few makers is not long term sustainable.

Something to consider…there’s been a lot of conversation about the bond bubble lately. Yields going to 4% causing a stock market crash etc…. If Bush’s tariff caused bond yields to drop could this also be the effect today? Maybe Bush was going for the tariff to get our steel industry back up to speed but the bond issue cratered the effort. With bond yields higher than a cat’s back, maybe pushing a steel tariff these days will get the desired effect on the steel industry and maybe lower bond yields to acceptable levels avoiding the bond bubble. Maybe.

red,
I fail to understand the relationship of bonds to tariffs,
could you elaborate?
Most of my retirement income comes from bonds and real estate.
I don’t pay much attention to equities and PM’s as I see them as
more like gambling than investments.
Tariffs suck, because they allow inefficiency and protection for Union workers and EPA Democrat regulators.

US should eliminate Federal taxation and fees, including all personal and corporate taxes of corporations that gross less than 10 million, and just tax imports and large corporations to run the government. The large corporations write the laws and control the lobbyists anyway.

Research Vitimin B17. Does Vitimin B17 deficiency cause cancer. Bitter apricot seeds. The Hunza don’t get Cancer, live to be over one hundred in good health they eat bitter apricot seeds which contain B17.

Crack open an apricot. There is a hard center. Crack that open and the seed is inside. Bitter Apricot seeds contain the highest amount of B17.

over the last few years I have read that Chinese steel has been failing, inferior grades, and out right fraud. Trump just passed this massive domestic infrastructure bill. My thoughts, do i want American Steel companies getting the contract, yes. Do i want American Steel companies employees getting paid, yes. Do i want quality and graded American Steel under my feet and vechical, yes. what is the problem? pay Chinese company 30% less or pay an American Company 30% more, well last i checked it was the American Steel worker buying products and services in Steel land USA. not some Chinese.

My old sears craftsman electric sander quit. so I bought a new one from Home Depot. a black plastic affair and the engine burnt up. it was replaced for free but that one wasn’t any good so I got my money back. Went to looking and all of thenew electric sanders where cheap imports. So I got my old craftsman out. Its a aluminum well built model 50 years old. took it apart and got a starter repair place to fix the armature and am happy again.

There will be no tariffs. Period. Tariffs don’t work anymore in a global economy. And besides we don’t import much stell from China or other countries people usually think if. 2% is from China, while 8% is from Germany. If you want to bring the steel industry back to the US then there’s easier ways to do it. Same with most manufacturing. Starting with taxing overseas profits of US companies. The only reason they go offshore is because of tax breaks. Rarely is labor a deciding factor except a few industries like clothing. Technology? Because Apple and all the computer companies want to keep profits made as tax free. Hence the reason Trump said companies could bring profits back with a one time tax break. Because they keep money over there and build factories over there because it’s tax free basically. And yet they enjoy the benefits of the US as a company. Screw the big companies that are screwing the American worker !!! Exxon does NOT need another massive tax break. Period.

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